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Can Small-Scale Farmers Be Linked To Agribusiness? The Timber Experience

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  • Sartorius, K
  • Kirsten, J

Abstract

The objective of this paper is to contribute to the design of agribusiness smallholder contracting linkages in South Africa. A fresh approach to design is adopted that combines a case study in the timber industry, the lessons of history and the economics of organisational architecture. The results confirm that the transaction characteristics of the grower-processor supply chain influence the level of managed co-ordination, that small-scale farmers generate incremental transaction cost and that medium and small-scale farmers can compete with larger growers in the supply chain. The results, however, are inconclusive with respect to the role of contracting as an institution to overcome the barriers of entry to the timber industry. A series of proposals are then developed in order to reduce transaction cost and achieve higher levels of contract enforcement in smallholder contracting arrangements with agribusiness. This paper concludes that large numbers of small-scale farmers can be effectively incorporated in the supply chain but only if specific measures are taken to reduce transaction cost.

Suggested Citation

  • Sartorius, K & Kirsten, J, 2002. "Can Small-Scale Farmers Be Linked To Agribusiness? The Timber Experience," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 0(Issue 4).
  • Handle: RePEc:ags:agreko:246001
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    File URL: http://ageconsearch.umn.edu/record/246001/files/41_4_3.%20Sartorius_%20Kirsten.pdf
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    References listed on IDEAS

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    5. Hennessy, David A., 1996. "Information Asymmetry As a Reason for Vertical Integration," Staff General Research Papers Archive 10422, Iowa State University, Department of Economics.
    6. Fafchamps, Marcel & Minten, Bart, 2001. "Property Rights in a Flea Market Economy," Economic Development and Cultural Change, University of Chicago Press, vol. 49(2), pages 229-267, January.
    7. Gow, Hamish R. & Streeter, Deborah H. & Swinnen, Johan F. M., 2000. "How private contract enforcement mechanisms can succeed where public institutions fail: the case of Juhocukor a.s," Agricultural Economics, Blackwell, vol. 23(3), pages 253-265, September.
    8. Rehber, Erkan, 1998. "Vertical Integration In Agriculture And Contract Farming," Working Papers 25991, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    9. V. James Rhodes, 1993. "Industrialization of Agriculture: Discussion," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(5), pages 1137-1139.
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    Keywords

    Agribusiness; Farm Management;

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